3 ways to take advantage of low interest rates

Mortgage rates have found their way down to the lowest point of the year.

Last week, they hit 4.10 percent for a 30-year fixed-rate mortgage (FRM) and 3.23 percent for a 15-year. Last year at this time, they were 4.58 percent and 3.6 percent respectively, according to the Freddie Mac Primary Mortgage Market Survey.

It’s not quite the growth toward 5 percent that most of us predicted would happen in 2014. In fact, the downward trend is quite the opposite.

This is good and bad news. The bad news first: The lack of interest rate growth means that the economy is not growing as much as anyone hoped. This also means interest rates on savings accounts are continuing to stagnate, which squeezes the budgets of a lot of retired folks on fixed incomes.

But this is good news for homebuyers, who should be thankful for the continued low rates. It’s also good news for current homeowners, who could have the opportunity to refinance their mortgages. With interest rates remaining low, now might be the time to consider making some financial moves.

1. Refinance your mortgage

Refinancing isn’t all the rage anymore. Interest rates have gone up since they hit their lowest point at 3.31 percent for a 30-year FRM in late 2012. That’s when many people were refinancing. If you didn’t jump on the trend then, do it now: Interest rates aren’t even a full point higher than their lowest rate. Let’s not forget that 7 to 9 percent was the norm in the ‘90s and early 2000s.

If you’re like me, you probably have a list of home improvements you’d like to do. If you’re putting them off because you don’t have the cash, now may be the time to secure some in order to make vital improvements or boost your home’s value with a remodeling project. Interest rates for home equity loans and home equity lines of credit (HELOC) are in the low 4s as well.

Most early real estate investors don’t just buy whole homes in cash (though that’s always ideal, isn’t it?). Instead, they get financing. While the rules are a little different when you’re buying an investment property rather than a home to live in—the down payment needs to be bigger, for starters—the rates are going to be comparable.

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Definitioner

Real Estate

Real Estate is land and anything permanently attached to it, such as buildings and improvements.

Point

A Point is one percent of a loan amount.

Mortgage

A Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home.

Loan

A Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interest.

Interest

Interest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds.

Equity

Your share of ownership in a company. Stockholders are often referred to as equity investors, because they invest in the equity of a company.